economic growth
SA’s one-percent fix
Firmer global growth, a softer oil price and a cautious Fed are ideal economic conditions for SA. It’s a pity it has been unable to turn them into growth in the midst of ‘the broadest synchronised upswing’ in years
Prior to the global financial crisis, SA thought of itself as a 3% economy, but by 2015 its growth potential had fallen to 2%. Last week the Reserve Bank made it official: SA’s growth potential is now just 1.1%, and may have further to fall. "SA’s falling growth potential is a function of consistently disappointing GDP growth since 2009," says the Bank’s head of research and statistics, Rashad Cassim. "The decline in SA’s potential growth rate shows you that this is a stagnant economy ... in fact, it is coming to a grinding halt," he says. The measurement of potential growth (how fast an economy can grow without stoking inflation) is based on actual data as opposed to forecasts, including what’s happening to indicators such as fixed investment, employment, capital extension, capacity utilisation and GDP. Cassim cautions against becoming too hung up on a precise figure for SA’s potential growth rate, given the large margin of error in measurements of this kind. But though the Bank is...
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